Crypto is Non-Existing Asset for Big Institutional Investors: JPMorgan
Global investment bank JPMorgan’s strategist has described crypto as effectively non-existing as an asset class for most large institutional investors. "The volatility is too high, and the lack of an intrinsic return that you can point to makes it very challenging," he added.
Crypto as Non-Existing Asset Class
Head
of institutional portfolio strategy, Jared Gross, at JPMorgan Asset Management,
discussed crypto and institutional investors’ interest in the asset class on
Bloomberg last Friday. The senior investment strategist described:
"As
an asset class, crypto is effectively non-existing for most large institutional
investors... The volatility is too high, and the lack of an intrinsic return
that you can point to makes it very challenging."
Gross
added that it is "self-evident" that bitcoin has not proven itself to
be a form of digital gold or haven asset like some had hoped. He continued:
"Most
institutional investors are probably breathing a sigh of relief that they
didn’t jump into that market and are probably not going to be doing so anytime
soon."
The
crypto market has declined significantly this year as the Federal Reserve and
other major central banks around the world raised interest rates to fight
inflation. There have also been collapses and bankruptcies within the sector,
including the most recent fallout from the crypto exchange, FTX.
Institutional Crypto Investors
Meanwhile,
a growing number of banks and financial institutions are offering crypto
products and services to their institutional clients. Investment giant State Street said in September that demand for crypto
assets is growing among institutional investors. Nasdaq established a crypto unit called "Nasdaq Digital Assets," in
September citing increased demand among institutional investors.
The
survey by crypto exchange Coinbase released in November revealed that
institutional investors increased their allocations during the crypto winter. The firm
highlighted that there is "a strong signal on the acceptance of crypto as
an asset class." A study published by financial giant Fidelity in October
revealed that 74% of institutional investors surveyed plan to invest in digital assets.
What
is your take on the JPMorgan assessment regarding institutional investors’
interest in crypto assets? Please post your comments.
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